CONSTRUCTION WORK OF TAVANTOLGOI-GASHUUNSUKHAIT RAILWAY TO BE INTENSIFIED

The Cabinet made its regular meeting on August 8. During the meeting, the Cabinet made a decision to establish ‘Tavan Tolgoi Railway’ company with state-ownership of not less than 51 percent.

The company is to be granted a 5-year license to construct embankment and foundation stage works of the railway in route Tavantolgoi-Gashuunsukhait. In addition, the Board of Directors of the ‘Erdenes Tavan Tolgoi’ JSC was authorized to fund certain part of the capital required to continue the constructional works of railway through establishing coal presale contract.

Moreover, corresponding ministers were assigned to study and hold talks with entities to make investment to the company, among foreign investors who are capable to pay advance payment, manage port utilization and make transit transportation. The ministers will report the result within this year.

An operation of 267km-long Tavantolgoi-Gashuunsukhait railway will create a possibility to export up to 30 million tons of coal annually. It will also reduce the railway transportation cost of ‘Erdenes Tavan Tolgoi’ JSC by roughly USD8 per ton, ensuring 4-fold cheaper transportation to neighbors and third market, as compared with auto road transportation. It is believed that the railway construction will increase workplaces and reduce environment deterioration such as soil and air pollution.

Although USD278 million was already spent on the railway project, the work has been stopped since 2015 due to lack of funds. Further, Erdenes Tavan Tolgoi JSC is able to invest the project with up to USD200 million, it is planned to offer 49 percent of the company to foreign investors. It is estimated to require USD790 million to complete the railway construction.